Global Sukuk Market:

Advantages, Requirements & Future

Prospects
IIFM Islamic Financial Markets Conference
Manama 16 May 2005

Advantages of Sukuk issuance

Diversify funding source
Create and enhance profile in international market
Pricing benchmark
Secondary liquidity
Sizeable financing yet small enough denominations
Ease of clearing and settlement

Advantages for a Sukuk Investor

Diversify Investment
Provides Leveraging Capabilities
Secondary Market Liquidity
Ease of clearing and Settlement
Investment available to Institutional and Retail investors
Allows for many computation of Risk Credit / Mkt / duration etc

Requirements for developing the Sukuk market

Sovereign issuers
Corporates
Rating --- Credit profile Maturity profile
Return profiles

Fixed
Floating

Secondary liquidity

Lead managers commitment

and responsibility

Issue size

Repo market

Finance position

Yield curve play

Credit play

Management of Liquidity

Future prospects for Sukuk

We have only begun to tap the surface of the global Sukuk market.
The potential that exists are enormous as along as we maintain
international standards

Islamic banks will become prominent borrowers like their conventional

counterparts

Project finance sukuk

Asset-backed sukuk
Mortgage-backed sukuk
Convertible/exchangeable sukuk
EMTS program
Development of hedging products

Future prospects: final remarks

It is clear that the supply side will be quite robust. The challenge for
Islamic financial institutions is to develop the following three
strategic areas:

Trading capabilities

Sell-down to private and retail clients

International repo capabilities

Thank you

Ismail Dadabhoy
Head of Institutional Banking
Noriba Bank (BSC) (c)